The draft bill first released in mid-September and re-released with changes last week (click for PDF), proposes rules for three prongs of broadband services: Voice over Internet Protocol (VoIP), broadband video services and broadband Internet transmission services, or BITS.

It's all part of Congress's drive to update the Telecommunications Act of 1996, which does not address the Internet and therefore "no longer reflects the technological and competitive reality," said Rep. Joe
Barton, the Texas Republican who chairs the House committee that has taken charge of drafting new regulations.

"There is no reason that Xbox Live should have to offer E911 service, nor should a collaborative work program like Live Meeting."

Major Internet players said they appreciated the effort but were troubled on several levels by the direction the current draft takes.

In a joint letter, representatives from Google, Amazon, eBay and
InterActiveCorp voiced opposition for the draft's failure to impose "Net neutrality" requirements equally on all three categories of services. That is, in the current draft, companies offering only standard broadband Internet services would be legally bound to ensure that subscribers could access and use all lawful Internet content and could connect any devices they wish. Broadband video services would not explicitly be held to the same requirements.

The companies charged that the omission could create a loophole for companies, such as SBC and Verizon, that provide both broadband Internet service and broadband video service.

"In addition, the provisions of the net neutrality section are troublingly ambiguous, and inject uncertainty for those companies like ours which are spending billions of dollars investing in broadband content and services," the companies wrote.

A Microsoft representative, who shared those concerns, raised another concern: By his estimation, the proposal would extend unreasonable obligations to an overly broad swath of Internet services.

"There is no reason that Xbox Live should have to offer E911 service, nor should a collaborative work program like Live Meeting," Paul Mitchell, senior director and general manager of Microsoft's TV division, said in prepared remarks before the committee. "Hotmail or MSN should not have to register with all 50 states in order to continue to provide service."

Mitchell was referring to two provisions in the current draft. First, all VoIP providers--a category that could include the new XBox and LiveMeeting products--must provide E911 service. Second, all broadband services must register with the states in which they do business. He suggested that only VoIP services that provide a "substantial replacement" for telephone service should have to provide E911 and broadband services should be under exclusively federal, not state, jurisdiction.

Net pioneer and Google Chief Internet Evangelist Vint Cerf sent his own letter urging Congress to think carefully about any new regulations for the Internet, which he said "was designed with no gatekeepers over new content or services."

"My fear is that, as written, this bill would do great damage to the Internet as we know it," wrote Cerf, who declined an invitation to speak at the hearing because he was scheduled to receive a presidential medal that evening.

On Wednesday, it remained unclear when legislation would be formally introduced or what changes may be made in the process. But Representative Barton of Texas said in a statement: "We have considered the issues involved in this legislation thoroughly and it is time to legislate."